Wow! This is pretty huge, and most certainly unexpected: Google CEO Larry Page has announced this morning that the company has purchased Motorola’s smartphone business for a whopping $12.5 billion — that’s $40 per share and a 63% premium to the price of Motorola Mobility’s closing shares on Friday.

Google says its acquisition of the business “will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing.” The operating system will remain open, according to Google, and it will continue to run Motorola Mobility as a separate business that will “remain a licensee of Android.” The company’s Corporate Developer boss, Andy Rubin, said during the conference call that this is about “protecting the ecosystem, and extending it as well.”

Motorola is one of the major manufacturers of handsets powered by Google’s Android operating system, selling 10.6 million handsets during the last quarter. However, it could certainly do better, according to AllThingsD. The company lost $53 million on sales of $3.3 billion during the last quarter, with operating losses of $23 million.

Motorola’s extensive patent portfolio was obviously a selling point for Google, which it says will enable to company to “better protect Android from anti-competitive threats from Microsoft, Apple and other companies.” According to The Next Web, the portfolio consists of over 17,000 patents already granted, with 7,500 still pending. Motorola Mobility’s chairman, Sanjay Jha, only spoke of the portfolio last week:

“We have a very large IP portfolio, and I think in the long term, as things settle down, you will see a meaningful difference in positions of many different Android players — both, in terms of avoidance of royalties, as well as collecting them. And that will make a big difference to people who have very strong IP positions.”

This is clearly massive news for Google, but I’m interested to see how other Android smartphone manufacturers will respond. Though Google has clearly stated the operating system will remain open, will manufacturers like Samsung and HTC be thinking about their own operating systems for back up?